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A Tractable Model of Reciprocity and Fairness

  • James C. Cox
  • Daniel Friedman
  • Steven Gjerstad

We introduce a parametric model of other-regarding preferences in which my emotional state determines the marginal rate of substitution between my own and others' payoffs, and thus my subsequent choices. In turn, my emotional state responds to relative status and to the kindness or unkindness of others' choices. Structural estimations of this model with six existing data sets demonstrate that other-regarding preferences depend on status, reciprocity, and perceived property rights.

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File URL: http://excen.gsu.edu/workingpapers/GSU_EXCEN_WP_2006-05.pdf
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Paper provided by Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University in its series Experimental Economics Center Working Paper Series with number 2006-05.

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Length: 42
Date of creation: Feb 2006
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Handle: RePEc:exc:wpaper:2006-05
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